Sources: Mitt plans China crackdown

Former Massachusetts Gov. Mitt Romney is dead serious about labeling China a currency manipulator and putting new tariffs on Chinese imports, sources close to Romney tell POLITICO.

Some have suggested that Romney’s stand against China is merely campaign posturing that would soften if Romney were to be elected President and consider the implications of his proposals.

Story Continued Below

“People should wait and see what he does after the Inauguration,” one senior adviser said to discount this notion, according to POLITICO’s Morning Money. “You have to look at how much we buy from China and how much they buy from us. Those numbers are a very serious deterrent to Chinese pursuing retribution against us. And from a strategic standpoint, if we are always unwilling to act because we think the Chinese might be willing to act, then we are always going to be stuck at this same point.”

Getting the Treasury Department to label China a currency manipulator and the Commerce Department to implement tariffs would actually be less important than what a potential Romney administration would do to prevent Chinese intellectual property theft and fight protectionist measures such as import quotas, the adviser said.

However, many Republicans fear that Romney’s actions could be damaging to the American economy. The Chinese could retaliate with reduced purchase of U.S. debt, and the tariffs would increase prices for American consumers.

Further, branding China a currency manipulator could stop cooperation on other areas of dispute and force all disagreements before the World Trade Organization, which could take years to reach a ruling of uncertain consequences.

“What would happen is we would badly damage our relations with the Chinese while also raising the question of consistency regarding other nations that also manage their currency,” Tony Fratto, a former Bush administration economic adviser and spokesman, told POLITICO.

“And what good would our chest thumping accomplish? The answer is not very much good at all. … Some critics of China say it would bring jobs back to the United States, but it just won’t. What you would see is that if China’s currency appreciates then non-Chinese Southeast Asian countries would become more competitive and trade flows would shift to them and not to the United States,” Fratto added.

Jon Huntsman, a former ambassador to China and twice-elected governor of Utah, said Monday that Romney’s stance would lead to a “trade war” with China.

If “you slap a tariff that Gov. Romney is proposing. They will then say, ‘Whoa. Your quantitative easing programs in the United States have done the same thing to the dollar. We’re going to slap a counter-tariff on you,’ and you got a trade war,” Huntsman told Bloomberg TV.